SECURITIES AND EXCHANGE COMMISSION

                           WASHINGTON, D.C.  20549


                                  FORM 10-Q


                 Quarterly Report Under Section 13 or 15(d)
                   of the Securities Exchange Act of 1934



For Quarter Ended March 31, 1998               Commission File Number 0-13318



                           STAR TECHNOLOGIES, INC.
           (Exact name of registrant as specified in its charter)




            Delaware                                            93-0794452
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                            Identification No.)



                                515 Shaw Road
                          Sterling, Virginia  20166
                  (Address of principal executive offices)
                                 (Zip Code)


                               (703) 689-4400
            (Registrant's telephone number, including area code)

                               Not Applicable
            (Former name, former address and former fiscal year,
                        if changed since last report)



      Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act 
of 1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days.

                           Yes   X         No     
                                ---            ---


  21,356,384 shares of Common Stock were outstanding as of March 31, 1998.

<PAGE>

PART I.  FINANCIAL INFORMATION

     Item 1.  Financial Statements

<TABLE>
<CAPTION>
                           STAR TECHNOLOGIES, INC. AND SUBSIDIARIES
                            CONSOLIDATED STATEMENTS OF OPERATIONS

                                         (Unaudited)
                            (In thousands, except per share data)

                                                                   Three Months Ended  
                                                                       March 31,       

                                                                  1998            1997 
Revenue
  <S>                                                            <C>          <C> 
  Products                                                       $   327         $   10
  Services                                                           816             99
                                                                 -------         ------
                                                                   1,143            109
Cost of revenue
  Products                                                            61            135
  Services                                                           607            186
                                                                 -------         ------
                                                                     668            321
                                                                 -------         ------
Gross margin                                                         475           (212)

Operating expenses
  Research and development                                           189            237
  Selling, general and administrative                              1,279            472
                                                                 -------         ------
    Total operating expenses                                       1,468            709

Operating loss                                                      (993)          (921)

Interest and other income, net                                         1            225
                                                                 -------         ------
Net loss before provision for income taxes                          (992)          (696)

Provision for income taxes                                             -              -
                                                                 -------         ------
Net loss                                                         $  (992)        $ (696)
                                                                 =======         ======

Net loss                                                         $  (992)        $ (696)
Preferred stock dividend requirement                                 (50)           (50)
                                                                 -------         ------
Net loss applicable to common shares                             $(1,042)        $ (746)
                                                                 =======         ======
Net loss per common share
  Basic                                                          $  (.05)        $ (.04)
  Diluted                                                        $  (.05)        $ (.04)

Weighted average common shares outstanding
  Basic                                                           21,306         19,842
  Diluted                                                         23,387         21,954

See accompanying notes to consolidated financial statements.
</TABLE>
                                      -1-
<PAGE>

<TABLE>
<CAPTION>
                           STAR TECHNOLOGIES, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
                                         (Unaudited)
                              (In thousands, except share data)

                                                             March 31,     December 31,
Assets                                                         1998            1997    
Current assets
  <S>                                                        <C>             <C>  
  Cash                                                       $     4         $    95
  Short-term investments                                         515           1,117
  Accounts receivable, net                                       453             630
  Other current assets, net                                      351             318
                                                             -------       ---------
    Total current assets                                       1,323           2,160

Property and equipment, net                                      926             775
Goodwill and other assets, net                                 2,641           2,728
                                                             -------       ---------
    Total assets                                             $ 4,890         $ 5,663
                                                             =======         =======
Liabilities and Stockholders' Equity
Current liabilities
  Accounts payable                                           $   906         $   665
  Accrued payroll and related benefits                           140             105
  Deferred revenue                                               360             451
  Other accrued liabilities                                      396             367
                                                             -------       ---------
    Total current liabilities                                  1,802           1,588

Commitments and contingencies                                      -               -

Stockholders' equity
  Preferred stock; $.01 par value; 1,000,000 shares authorized
    Series A convertible; 500,000 shares designated; 13,200
      issued; 13,200 shares outstanding; aggregate liquidation
      preference of $475                                           1               1
    Series B convertible; 120,117 shares designated; 11,917
      shares issued and outstanding; aggregate liquidation
      preference of $1,192                                         1               1
    Series C convertible; 80,079 shares designated; 7,945
      shares issued and outstanding; aggregate liquidation
      preference of $795                                           1               1
  Common stock; $.01 par value; 60,000,000 shares authorized;
    21,451,575 and 19,968,075 shares issued; 21,356,384 and
    19,872,884 shares outstanding                                215             214
  Additional paid-in capital                                  61,396          61,357
  Accumulated other comprehensive income (loss)                 (169)           (134)
  Treasury stock, at cost; 95,191 shares                        (209)           (209)
  Retained deficit                                           (58,148)        (57,156)
                                                             -------       ---------

    Total stockholders' equity                                 3,088           4,075
                                                             -------       ---------
    Total liabilities and stockholders' equity               $ 4,890         $ 5,663
                                                             =======         =======
</TABLE>
               See accompanying notes to consolidated financial statements.

                                       -2-
<PAGE>
<TABLE>
<CAPTION>
                         STAR TECHNOLOGIES, INC. AND SUBSIDIARIES
                          CONSOLIDATED STATEMENTS OF CASH FLOWS
                                       (Unaudited)
                                      (In thousands)


                                                                Three Months Ended  
                                                                     March 31,      
  
                                                                1998           1997 

Cash flows from (used for) operating activities
  <S>                                                         <C>            <C>
  Net loss                                                    $  (992)       $ (696)

Adjustments to reconcile net loss to net cash
  from (used for) operating activities
    Depreciation and amortization                                 183            44
    Loss on sale of property and equipment                          -           101
    Decrease in accounts receivable                               177            96
    (Increase) decrease in other current assets                   (33)          236
    Increase (decrease) in accounts payable                       241          (155)
    Decrease in accrued liabilities                               (27)         (498)
                                                              -------        ------
Net cash used for operating activities                           (451)         (872)
                                                              -------        ------
Cash flows from (used) for investing activities
    Proceeds from sale of property and equipment                    -            12
    Capital expenditures                                         (247)          (36)
    Other investing activities, net                                 -           109
                                                              -------        ------
Net cash from (used for) investing activities                    (247)           85
                                                              -------        ------
Cash flows from (used for) financing activities
    Proceeds from stock option exercises                           40             -
                                                              -------        ------
Net cash from financing activities                                 40             -
                                                              -------        ------
Net decrease in cash and equivalents                             (658)         (787)

Cash and equivalents, beginning of period                         771         6,330
                                                              -------        ------
Cash and equivalents, end of period                           $   113        $5,543
                                                              =======        ======

</TABLE>








See accompanying notes to consolidated financial statements.

                                         -3-
<PAGE>

                  STAR TECHNOLOGIES, INC. AND SUBSIDIARIES
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     During 1997, Star Technologies, Inc. ("Star" or the "Company") completed 
a transition from providing performance-enhancing computing products and 
solutions principally for the medical imaging market to providing imaging 
solutions for the broader document imaging market.  In July 1997, the Company 
sold its medical imaging archival technology and, through a newly-created 
operating subsidiary, PowerScan, Inc. ("PowerScan"), acquired document 
imaging and processing technology from Intrafed, Inc., as its entry into this 
broader market.  Additionally, in October 1997, the Company acquired Curran 
Data Technologies, Inc. ("CDT"), a provider of data entry imaging services.  
With these two acquisitions, Star is a provider of integrated products and 
services for commercial and government users involved in data capture, image 
capture and document imaging.  These two acquisitions are part of the 
Company's long-term growth plan to build market presence in the document 
imaging market through strategic acquisitions and alliances.  The Company 
continues its search to identify additional acquisition opportunities in this 
market.


NOTE 1 - Financial Information

     The interim consolidated financial statements presented herein are 
unaudited.  They reflect all adjustments that, in the opinion of management, 
are necessary to fairly present the Company's financial position and results 
of operations for the interim periods presented.  All such adjustments are of 
a normal, recurring nature.  The results of operations for the three-month 
period ended March 31, 1998 are not necessarily indicative of the results to 
be expected for the entire fiscal year.

     The interim consolidated financial information should be read in 
conjunction with the Company's Transition Report on Form 10-K, Commission 
file number 0-13318, for the Transition Period from April 1, 1997 to December 
31, 1997.

     Certain 1997 amounts have been reclassified for comparative purposes.


NOTE 2 - Accounting Policies

Revenue recognition

     On January 1, 1998, the Company adopted Statement of Position 97-2, 
"Software Revenue Recognition" ("SOP 97-2") which superseded Statement of 
Position 91-1, "Software Revenue Recognition."  SOP 97-2 focuses on when and 
in what amounts revenue should be recognized for licensing, selling, leasing 
or otherwise marketing computer software.  The adoption of SOP 97-2 did not 
have a material impact on the Company's revenue recognition policies.

     Revenue from the sale of commercial, off-the-shelf software is 
recognized when the following four criteria are met:  (1) the sale is in 
writing, (2) the software has been shipped, (3) the fee is fixed or 
determinable and (4) collectibility is probable.  Customized software revenue 
is recognized when the software is accepted by the customer.

                                       -4-
<PAGE>
     Maintenance revenues, which include unspecified when-and-if deliverable 
software upgrades, user documentation and technical support for software 
products, are deferred and recognized on a straight-line basis over the term 
of the maintenance agreement, generally one year.  Revenue from services 
including data entry, integration, installation and system training is 
recognized when the services are performed.  Amounts received but not earned 
are deferred.

Net income (loss) per share

     Basic and diluted net income (loss) per share were computed in 
accordance with Statement of Financial Accounting Standards No.128, "Earnings 
Per Share."  The differences between basic weighted average common shares 
outstanding and diluted weighted average common shares outstanding are as 
follows (in thousands):
<TABLE>
                                                         Three Months Ended
                                                             March 31,     
                                                          1998       1997  
                                                          ----       ----
     <S>                                                 <C>        <C>
     Basic weighted average common shares                21,306     19,842

     Convertible preferred stock                          2,081      2,112
                                                         ------     ------
     Diluted weighted average common shares              23,387     21,954
                                                         ======     ======
</TABLE>

NOTE 3 - Cash and Equivalents and Short-Term Investments

     Cash and equivalents include cash and short-term investments in 
commercial paper.  Short-term investments in commercial paper, which are held 
to maturity (less than three months from the date of purchase), are carried 
at cost which approximates their market value.  These investments totaled 
$109,000 and $676,000 at March 31, 1998 and December 31, 1997, respectively.

     At March 31, 1998 and December 31, 1997, other short-term investments 
include 92,800 shares of common stock of Lumisys, Inc. ("Lumisys") acquired 
from the sale of the Company's medical imaging archival technology in July 
1997.  The Company does not actively seek to trade this investment for 
purposes of maximizing trading gains and classifies it as "available for 
sale."  Accordingly, the temporary excess (deficiency) of market value over 
(under) the underlying cost is reported as an unrealized gain (loss) as a 
separate component of stockholders' equity.


NOTE 4 - Accounts Receivable

     Accounts receivable are shown net of an allowance for doubtful accounts 
of $13,000 and $22,000 at March 31, 1998 and December 31, 1997, respectively.


                                       -5-
<PAGE>
NOTE  5 - Comprehensive Income (Loss)

     In June 1997, the Financial Accounting Standards Board issued Statement 
of Financial Accounting Standards No. 130, "Reporting Comprehensive Income."  
The new disclosure requirements with respect to comprehensive income (loss) 
are as follows (in thousands):
<TABLE>
                                                         Three Months Ended
                                                             March 31,     
                                                          1998       1997  
     Comprehensive income (loss):                         ----       ----

     <S>                                                 <C>        <C>
     Net loss, as reported                               $  (992)   $ (696)

     Unrealized loss on investment                           (35)        -
                                                         -------    ------
       Total comprehensive income (loss)                 $(1,027)   $ (696)
                                                         =======    ======
</TABLE>

NOTE 6 - Subsequent Events

     In April 1998, the Company entered into a $750,000 working capital line 
of credit with a financial institution.  The line of credit is secured by the 
Company's accounts receivable, inventory and other assets and allows 
borrowings of up to 80% of the accounts receivable balance.  The line of 
credit carries an interest rate of prime plus 3% as well as a service fee 
ranging from .75% to 1.5% of the amount borrowed.

     Also in April 1998, the Company entered into a $300,000 line of credit 
with a bank.   The line of credit is secured by the Company's short-term 
investment in Lumisys common stock, carries interest at prime plus one 
percent and allows borrowings of up to 70% of the Lumisys stock's market 
value.

     The Nasdaq Stock Market, on which the Company's common stock is 
currently traded, has adopted increased quantitative and other listing 
standards which became effective on February 28, 1998.  The Company does not 
currently meet the new requirements for continued listing with respect to (i) 
a minimum bid price of $1 per share, and (ii) net tangible assets of 
$4,000,000.  Nasdaq notified the Company in early April 1998 of the Company's 
non-compliance with the continued listing requirements.  In response, the 
Company submitted to Nasdaq a proposed plan to achieve such compliance.  
After review of that plan, Nasdaq reiterated its intention to delist the 
Company's common stock from the Nasdaq National Market.  The Company has 
appealed this decision.  The hearing date for the appeal is June 4, 1998, 
with the delisting action stayed through that date.  If Nasdaq ultimately 
determines to remove the Company's common stock from the Nasdaq National 
Market, the Company will request that its common stock be moved from the 
Nasdaq National Market to the Nasdaq SmallCap Market.  There can be no 
assurance that Nasdaq will agree to such action.  If it does not, trading on 
the Company' common stock would thereafter be conducted on the OTC Bulletin 
Board or in the over-the-counter market.

                                       -6-
<PAGE>
     Item 2. Management's Discussion and Analysis of Results of
             Operations and Financial Condition

     The following information should be read in conjunction with the 
consolidated financial statements and the notes thereto and in conjunction 
with the Management's Discussion and Analysis of Financial Condition and 
Results of Operations in the Company's Form 10-K for the Transition Period 
from April 1, 1997 through December 31, 1997.  This Quarterly Report, and in 
particular Management's Discussion and Analysis of Financial Condition and 
Results of Operations, contain forward-looking statements (as defined in 
Section 21E of the Securities Exchange Act of 19934, as amended) which 
reflect management's current views with respect to certain future events and 
financial performance.  Actual future results and trends may differ 
materially depending upon a variety of factors, including, among others, risk 
of technological change and uncertainty of product development, risks 
associated with acquisitions, the potential inability to finance future 
capital needs, operating losses, competition, probable fluctuations in 
operating results, reliance on key personnel, the risk of business 
interruptions, potential inability to protect proprietary rights and the risk 
of defects, as discussed under the heading "Risk Factors" in the Company's 
Form 10-K for the Transition Period from April 1, 1997 through December 31, 
1997.

Corporate Repositioning

     During 1997, Star Technologies, Inc. ("Star" or the "Company") completed 
a transition from providing performance-enhancing computing products and 
solutions principally for the medical imaging market to providing imaging 
solutions for the broader document imaging market.  In July 1997, the Company 
sold its medical imaging archival technology, and through a newly-created 
operating subsidiary, PowerScan, Inc. ("PowerScan"), acquired document 
imaging and processing technology from Intrafed, Inc., as its entry into this 
broader market.  Additionally, in October 1997, the Company acquired Curran 
Data Technologies, Inc. ("CDT"), a provider of data entry imaging services.  
With these two acquisitions, Star is a provider of integrated products and 
services for commercial and government users involved in data capture, image 
capture and document imaging.  These two acquisitions are part of the 
Company's long-term growth plan to build market presence in the document 
imaging market through strategic acquisitions and alliances.  The Company 
continues its search to identify additional acquisition opportunities in this 
market.

Results of Operations

     Results of operations for the three months ended March 31, 1998 are not 
directly comparable to the results of operations for the same prior-year 
period due to the repositioning of the Company's line of business from the 
medical imaging market to the document imaging market.  The Company's results 
of operations for the quarter ended March 31, 1998, reflect the first full 
quarter to include the operations (revenue and expenses) of both CDT and 
PowerScan.

Revenue

     Total revenue for the three months ended March 31, 1998 increased to 
$1,143,000, from $109,000 for the same period a year ago.  Product revenue 
was $327,000 and $10,000 for the three months ended March 31, 1998 and 1997, 
respectively, representing 28.6% and 9.2% of total revenue for such periods.  
                                       -7-
<PAGE>

Service revenue was $816,000 and $99,000 for the three months ended March 31, 
1998 and 1997, respectively, representing 71.4% and 90.8% of total revenue 
for such periods.  Product revenue consists of revenue from the sale of 
PowerScan and StageWorks software as well as computer hardware and scanning 
equipment.  Service revenue consists of revenue from data entry and imaging 
services, integration, installation, and systems training provided to the 
Company's customers.

     The increases in product and service revenue are primarily attributable 
to sales of the new document imaging products and services following the 
acquisitions described above.  See "Corporate Repositioning."  In the first 
three months of 1998, the Company broadened its distribution strategy for its 
imaging software by focusing on channel, value added reseller (VAR) and 
integrator distribution.  In this regard, the Company's PowerScan subsidiary 
added Amitech to its growing list of VARs that market the PowerScan and 
StageWorks software.  PowerScan also entered into several key industry 
partnerships, including a joint marketing program agreement with Excalibur, a 
leading developer of document  archival and retrieval software solutions, 
pursuant to which the Company and Excalibur will market each other's 
products.  The change in distribution strategy, as well as the recently 
entered into original equipment manufacturer (OEM) agreements with, among 
others, Fuji Photo Film USA and BancTec Inc., should have a favorable impact 
on the Company's results of operations beginning in the second half of 1998.

Cost of Revenue

     Cost of product revenue was $61,000 and $135,000 for the three months 
ended March 31, 1998 and 1997, respectively, representing 18.6% and 1,350% of 
total product revenue in the respective periods.  Cost of product revenue 
primarily includes costs associated with the purchase of hardware products 
and scanning equipment for resale.  The cost of product revenue as a 
percentage of product revenue may vary from period to period depending on the 
ratio of software revenue, which has a lower cost, to hardware revenue.

     Cost of service revenue was $607,000 and $186,000 for the three months 
ended March 31, 1998 and 1997, respectively, representing 74.4% and 187.9% of 
total service revenue in the respective periods.  The increase in the dollar 
amount of cost of service revenue is primarily attributable to an increase in 
compensation and related benefits, the use of independent contractors and 
third party maintenance contracts in connection with the corresponding 
increase in service revenue associated with the Company's corporate 
repositioning.

Research and Development

     Research and development ("R&D") expenses consist primarily of:  
compensation and related benefits; the use of independent contractors for 
development projects; and an allocated portion of general overhead costs, 
including occupancy.  At March 31, 1998, the research and development staff 
consisted of 8 employees.  The majority of product R&D expenses for the 
current quarter relate to on-going product enhancements.  R&D expenses were 
$189,000 and $237,000 for the three-month period ended March 31, 1998 and 
1997, respectively, representing 16.5% and 217.4% of total revenue in the 
respective periods.  The decrease in the dollar amount of R&D expenses for 
the three month period ended March 31, 1998 compared to the same period of 
the prior year is primarily attributable to the Company's sale in July 1997 
of its medical imaging technology, offset in part by R&D expenses associated 

                                       -8-
<PAGE>

with the Company's document imaging software, acquired in July 1997.  The 
decrease as a percentage of total revenue is due to the Company's corporate 
repositioning and the resultant increased revenue.  The Company believes that 
R&D expenditures, including compensation of technical personnel, are 
essential to maintaining its competitive position and expects these costs to 
increase and continue to constitute a significant percentage of revenue.

Selling, General and Administrative

     Selling, general and administrative ("SG&A") expenses consist primarily 
of:  compensation and related benefits and reimbursable travel and living 
expenses related to the Company's sales, marketing and administrative 
personnel; advertising and marketing expenses, including trade shows and 
similar type sales and marketing expenses; and general corporate expenses, 
including occupancy costs.  SG&A expenses for the three months ended March 
31, 1998, after excluding personnel restructuring charges, was $1.0 million, 
compared to $472,000 for the same period a year ago.  The increase in the 
dollar amount of SG&A expenses is primarily due to the additional SG&A 
expense associated with the Company's new PowerScan and CDT subsidiaries, 
offset in part by the elimination of certain costs associated with the 
Company's former medical imaging business.

Interest and Other Income

     During the three months ended March 31, 1998 and 1997, the Company 
earned $5,000 and $79,000, respectively, of net interest income.  Other 
income for the three months ended March 31, 1997 included a one-time payment 
of $116,000 received from the Company's former health insurance company in 
connection with its conversion from a mutual insurance company to a stock 
company.

Net Loss

     The net loss for the three months ended March 31, 1998 was $992,000 
($.05 per share) compared with a net loss of $696,000 ($.04 per share) for 
the same period of the prior year.  The net loss is due to the corporate 
repositioning of the Company, and the associated integration of the document 
imaging operations acquired as a result of the two acquisitions discussed 
above.  In spite of the net loss, management continues to believe that the 
document imaging market is a significant market.  Management believes it has 
made investments in the talent and technology necessary to establish the 
Company in this marketplace.  However, there can be no assurance that the 
Company will be able to achieve consistent profitability on a quarterly or 
annual basis or that it will be able to sustain or increase its revenue 
growth in future periods.  Based upon the expenses associated with current 
and planned staffing levels, profitability is dependent upon increasing 
revenues.

Liquidity and Capital Resources

     At March 31, 1998, the Company had $113,000 of cash and equivalents and 
$406,000 of short-term investments.  The Company had a net cash outflow from 
operating activities of $451,000 for the quarter ended March 31, 1998.

     In April 1998, the Company entered into a $750,000 working capital line 
of credit with a financial institution.  The line of credit is secured by the 
Company's accounts receivable, inventory and other assets and allows 
borrowings of up to 80% of the accounts receivable balance.  The line of 
credit carries an interest rate of prime plus 3% as well as a service fee 
ranging from .75% to 1.5% of the amount borrowed.

     Also in April 1998, the Company entered into a $300,000 line of credit 
with a bank.   The line of credit is secured by the Company's short-term 
investment in Lumisys common stock, carries interest at prime plus one 
percent and allows borrowings of up to 70% of the Lumisys stock's market 
value.

                                       -9-
<PAGE>

     The Company's operations and acquisitions to date have consumed 
substantial amounts of cash.  The continuing operation of the Company's 
business, and the continued development and commercialization of its 
technology, products and services, will require the availability of 
additional funds for the foreseeable future.  The Company's ability to obtain 
cash adequate to fund its needs depends generally on the results of its 
operations and the availability of financing.  The Company believes that 
available funds and expected cash flow to be generated from operations, 
together with any borrowings under the two credit arrangements, will be 
sufficient to meet its anticipated cash needs through the end of 1998.  If 
the cash flow from operations is insufficient or if the Company makes 
acquisitions requiring significant cash outlays, the Company likely would be 
required to raise additional funds from debt or equity placements, or reduce 
discretionary operating and capital expenditures.  If the Company has 
insufficient funds for its needs, the Company may not be able to raise 
additional funds on favorable terms, if at all, or may not be able to do so 
on a timely basis.  Failure to obtain additional funds when needed could 
materially adversely affect the Company.

     The Series B and Series C Senior Preferred Stock (the "Preferred Stock") 
currently accrue dividends at a rate of 10% per annum.  To the extent 
declared, such dividends would be payable quarterly in the amount of $50,000 
in cash.  Unpaid cumulative dividends in arrears on the Preferred Stock total 
$325,000 as of March 31, 1998.

Potential Delisting of Common Stock From Nasdaq National Market

     The Nasdaq Stock Market, on which the Company's common stock is 
currently traded, has adopted increased quantitative and other listing 
standards which became effective on February 23, 1998.  The Company does not 
currently meet the new requirements for continued listing with respect to (i) 
a minimum bid price of $1 per share, and (ii) net tangible assets of 
$4,000,000.  Nasdaq notified the Company in early April 1998 of the Company's 
non-compliance with the continued listing requirements.  In response, the 
Company submitted to Nasdaq a proposed plan to achieve such compliance.  
After review of that plan, Nasdaq reiterated its intention to delist the 
Company's common stock from the Nasdaq National Market.  The Company has 
appealed this decision.  The hearing date for the appeal is June 4, 1998, 
with the delisting action stayed through that date.  If Nasdaq ultimately 
determines to remove the Company's common stock from the Nasdaq National 
Market, the Company will request that its common stock be moved from the 
Nasdaq National Market to the Nasdaq SmallCap Market.  There can be no 
assurance that Nasdaq will agree to such action.  If it does not, trading on 
the Company' common stock would thereafter be conducted on the OTC Bulletin 
Board or in the over-the-counter market.

Year 2000 Disclosure

     The Company has made a preliminary assessment of potential Year 2000 
issues with respect to various computer-related systems.  The Company's 
corrective actions will include reprogramming impacted software when 
appropriate and feasible, obtaining vendor-provided software upgrades when 
available and completely replacing impacted systems when necessary.  The 
Company believes that the costs to correct its systems will not materially 
and adversely affect its business, results of operations or its financial 
condition.  However, there can be no assurance that the Company has 
identified all Year 2000 impacted systems or that its corrective actions will 
be timely and successful.

                                       -10-
<PAGE>

Effect of New Accounting Standards

     In June 1997, the Financial Accounting Standards Board issued Statement 
of Financial Accounting Standards No. 131 ("FAS No. 131"), "Disclosure about 
Segments of an Enterprise and Related Information".  FAS No. 131 requires the 
Company to present certain information about operating segments and related 
information, including geographic and major customer data, in its annual 
financial statements and in condensed financial statements for interim 
periods.  The Company is required to adopt the provisions of this Statement 
during fiscal year 1998.  The effect of adoption of this statement will be 
limited to the form and content of the Company's disclosures and will not 
impact the Company's results of operations, cash flow or financial position.

                                       -11-
<PAGE>

PART II.  OTHER INFORMATION

     Item 1.  Legal Proceedings

     The Company is from time to time a party to litigation arising in the 
normal course of its business.  Such claims, even if lacking merit, could 
result in the expenditure of significant financial and managerial resources.  
Management believes that no currently pending or threatened actions will have 
a material and adverse effect on the financial condition or results of 
operations of the Company.

     Item 5.  Other Information

     The Nasdaq Stock Market, on which the Company's common stock is 
currently traded, has adopted increased quantitative and other listing 
standards which became effective on February 23, 1998.

     In early April 1998, the Nasdaq Stock Market, Inc. ("Nasdaq") informed 
the Company that, based upon a review of the Company's Form 10-K for the 
transition period from April 1, 1997 through December 31, 1997, the Company 
no longer meets the net tangible assets requirement for continued listing on 
the Nasdaq National Market.  The Nasdaq rules require, among other things, 
that the Company have net tangible assets (defined by Nasdaq as total assets, 
excluding goodwill, minus total liabilities) of at least $4,000,000.  At 
December 31, 1997, the Company's net tangible assets were approximately 
$1,347,000, and at March 31, 1998, the Company's net tangible assets were 
$447,000.  In response, the Company submitted to Nasdaq a proposed plan to 
achieve such compliance.  After review of that plan, Nasdaq notified the 
Company of the denial of the Company's request for an extension to complete 
the Company's plan to meet Nasdaq's continued listing requirements.  Nasdaq 
indicated that the Company's common stock would be delisted from the Nasdaq 
National Market on the opening of the market on May 1, 1998.  The Company 
then requested an oral hearing to appeal this decision.  The hearing date for 
the appeal is June 4, 1998, with the delisting action stayed through the 
hearing date.

     Even if the Company is successful in getting Nasdaq to accept its plan 
and defer delisting its common stock, there can be no assurance that the plan 
will be successful.  Furthermore, under the new continued listing 
requirements, any security with a minimum bid price of less than $1.00 per 
share is subject to delisting, regardless of the issuer's net tangible 
assets.  The closing pricing of the Company's common stock on May 14, 1998, 
was $0.72.

     If Nasdaq ultimately determines to remove the Company's common stock 
from the Nasdaq National Market, the Company will request that its common 
stock be moved from the Nasdaq National Market to the Nasdaq SmallCap Market.  
There can be no assurance that Nasdaq will agree to such action.  If it does 
not, trading of the Company's common stock would thereafter be conducted on 
the OTC Bulletin Board or in the over-the-counter market.

     The Company intends to re-apply for listing on the Nasdaq National 
Market or the Nasdaq SmallCap Market as soon as possible after the Company is 
able to satisfy the applicable listing requirements.  There can be no 
assurance that the Company will be able to satisfy such requirements.

                                       -12-
<PAGE>

     Item 6.  Exhibits and Reports on Form 8-K

     (a) Exhibits.

         The exhibits filed herewith or incorporated by reference are set 
         forth on the Exhibit Index immediately preceding the exhibits.

     (b) Reports on Form 8-K.

         No reports on Form 8-K were filed by the Company during the quarter 
         ended March 31, 1998.


                                       -13- 
<PAGE>

                                 SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the 
registrant has duly caused this report to be signed on its behalf by the 
undersigned thereunto duly authorized.

                               STAR TECHNOLOGIES, INC.


Dated:  May 15, 1998           /s/ Brenda A. Potosnak                 
        ------------           --------------------------------
                               Brenda A. Potosnak
                               Vice President of Finance and Administration,
                               Secretary, Treasurer and Chief Financial 
                               Officer


                                       -14-
<PAGE>

                                     EXHIBIT INDEX

    Exhibit
      No.  
    -------

      3.1*       Restated Certificate of Incorporation of the Company, as 
                 amended, incorporated by reference from the Company's Annual 
                 Report on Form 10-K for the fiscal year ended March 31, 1988 
                 (Registration No. 0-13318) filed with the Commission on June 
                 29, 1988.

      3.2*       Certificate of Designation, Preferences and Rights of Series 
                 B Senior Preferred Stock and Series C Senior Preferred Stock 
                 ("Certificate of Designation"), incorporated by reference 
                 from the exhibit filing to the Company's Annual Report on 
                 Form 10-K for the fiscal year ended March 31, 1990 
                 (Registration No. 0-13318) filed with the Commission on June 
                 29, 1990.

      3.3*       Certificate of Amendment of Restated Certificate of 
                 Incorporation of the Company, dated August 29, 1994, 
                 incorporated by reference from the Company's Annual Report 
                 on Form 10-K for the fiscal year ended March 31, 1995 
                 (Registration No. 0-13318) filed with the Commission on June 
                 29, 1995.

      3.4*       Certificate of Amendment of Restated Certificate of 
                 Incorporation of the Company, dated August 23, 1996, 
                 incorporated by reference from the exhibit filing to the 
                 Company's Quarterly Report on Form 10-Q for the Quarter 
                 ended September 30, 1996 (Registration No. 0-13318) filed 
                 with the Commission on November 14, 1996.

      3.5*       By-Laws of the Company, as amended and restated on February 
                 24, 1994, and as further amended on August 22, 1996, 
                 incorporated by reference from the exhibit filing to the 
                 Company's Quarterly Report on Form 10-Q for the Quarter 
                 ended September 30, 1996 (Registration No. 0-13318) filed 
                 with the Commission on November 14, 1996.

      11         Statement Regarding Computation of Per Share Earnings.

      27         Financial Data Schedule.













*Incorporated by reference.

                                       -15-
<PAGE>